The Bank of England has raised rates to 0.25% for the first time in three years in a surprise move that sent the pound and bond yields higher.

USD/GBP was 0.79% higher at 1.3367 and the UK 10-year gilt yield rose to 0.797% in the immediate market reaction. The FTSE 100 dipped slightly 7,241 but held onto 1% gains on the day.

The Bank of England had to balance the impact of soaring inflation on households and businesses with the economic impact of the new coronavirus variant. The possible negative impact of inflation won.

Inflation has recently hit 5.1% – the highest level for 10 years – driven by rising food and fuels costs. This proved too much for the Monetary Policy Committee who voted 8-1 in favour in hiking rates.

Today’s move would suggest the Bank of England is planning to walk a similar path as the Federal Reserve in embarking on a series of hikes to help fight rising prices.

However, trying predict what the Bank of England will do next could be a source of uncertainty because the Bank of England has surprised markets on a number of occasions now and provided mixed messages.

The Bank of England did say they saw inflation peaking around 6% in April. A sustained period of inflation would demand further action from the Bank of England to help preserve household spending power.

“Whilst there was some thought that the emergence of Omicron may delay any rate rises, the rise has only been marginal with rates moving from 0.10% to 0.25% and this is unlikely to slow the economy much,” said Dan Boardman-Weston, CIO at BRI Wealth Management.

“We think the Bank needed to send a message that they are taking the threat of inflation seriously and leaving rates at the same level in the same week inflation moved over 5% would have been poorly received.”

Energy services provider Petrofac has suffered during the pandemic and a trading statement released today suggests their woes may persist for the foreseeable future.

The company said it expects revenue to be $3 billion and profit similar to last year and market expectations. Petfrofac recorded at $189 million loss in 2020.

Revenue of $3 billion would be less than the $4 billion recorded in 2020 and significantly less than 2019’s $5.5 billion revenue.

“Petrofac’s expecting full year revenue to come in significantly below last year’s as low order intake and coronavirus-related troubles continued to weigh on the business. While the Securities and Fraud Office investigation into bribery claims has finally been settled, the group will be feeling the impact of the ordeal for some time to come,” said Laura Hoy, Equity Analyst at Hargreaves Lansdown.

“Not only was it dealt a £77m pound fine, but the group was unable to do business in some of the most lucrative oil and gas markets which has had a significant impact on this year’s results.”

“Today’s update suggests the group’s hit the ground running as it rebuilds its order backlog under new CEO Sami Iskander. But there’s a long road ahead and covid-related headwinds aren’t helping matters. With revenue and profits expected to remain significantly below 2019 levels for the foreseeable.”

Sami Iskander, Petrofac’s Group Chief Executive, commented:

“In 2021 Petrofac has taken an important step forward, closing out the SFO investigation and embedding a strategy focused on future growth. During this period we have continued to deliver projects and operations safely for our clients worldwide, despite the ongoing challenges of the Covid-19 pandemic which continue to impact our current E&C portfolio.”

Having previously been included in the FTSE 100, Petrofac shares are a shadow of their former selves, trading at 111p on Thursday valuing the company at just £577m. Petrofac shares traded above 1,750p in 2012.

Walkers have swung to profit for the first half of the year.

Revenues were up by 9.3% and increased from £14.35m to £15.69m. Profits grew from last years loss of £374,000 to a profit of £232,000.

“The Group reports a small profit at the half-year compared to the prior period loss, and continues to generate positive adjusted EBITDA and underlying operating cash, which enable continued support of our revenue and growth initiatives,” said Martin Wright, Chairman of the group.

“Headwinds include inflationary cost pressures and our focus continues to be on revenue growth, improving operating efficiency and cost control,” he said.

Shareholders received an interim dividend of 0.30 pence per share.

Boohoo has lowered its full-year sales growth guidance, from 25% to 12% – causing shares to plunge. Shares fell 11% this morning to 122.05p.

Despite strong demand, guidance was lowered due to continued supply chain issues and inflation.

Chief executive John Lyttle said: “The group has gained significant market share during the pandemic. The current headwinds are short term and we expect them to soften when pandemic related disruption begins to ease.

“Looking ahead, we are encouraged by the strong performance in the UK, which clearly validates the boohoo model.”

Gross sales increased by 28% whilst  UK net sales were up 32% compared to the same period a year earlier.

“It’s never good when the name of your company is the same sound as the management are making after issuing a profit warning,” said Russ Mould, investment director at AJ Bell.

“Boohoo has already had a troubled year; add in the damage from the latest setback and you’re looking at a 66% share price slump so far in 2021.

“Last year the business was dragged over the coals for poor ESG practices, and it spent a long time trying to rectify what had become a PR disaster.

“This year supply chain issues and cost inflation are to blame for the online fashion retailer’s struggles, with a spike in product return rates also dragging the business down.”